All Forum Posts by: Bud Evans

Good day everyone, 

I'm looking for a generic sub-to contract in NJ. Something I can take to my attorney as a starting point. I'm licensed but can't find a doggone thing on the NJ Agent sites. Any help would be greatly appreciated. 

Investment Info:

Other commercial investment investment.

Purchase price: $350,000

This is a commercial mixed-use property on NJ State Rt 130. The property was under-rented, and the owner was using the commercial space. The property was purchased using an income valuation approach, and the rents were below market. We also excluded the owner's opinion that the commercial space was valued at $600 per month. We are increasing rents as leases expire, and all tenants are on board with $150 increases. Value increase $150k

How did you find this deal and how did you negotiate it?

Wholesaler friend working to purchase 100 doors this year.

How did you finance this deal?

Hard money, then rehabbed and refinanced.

How did you add value to the deal?

Light reno to the building. light reno to the units. increased rents

What was the outcome?

We'll be rehabbing the final unit at the end of the year. REhabbing the unit will increase the value of the property substantially by over $100k

Lessons learned? Challenges?

Use whatever means possible to use OPM in the purchase of CMF

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I used my team to find and BRRRR the property, and MIRS Lending Group, LLC for the loans.

Investment Info:

Other commercial investment investment.

Purchase price: $350,000

This is a commercial mixed-use property on NJ State Rt 130. The property was under-rented, and the owner was using the commercial space. The property was purchased using an income valuation approach, and the rents were below market. We also excluded the owner's opinion that the commercial space was valued at $600 per month. We are increasing rents as leases expire, and all tenants are on board with $150 increases. The commercial space will be rehabbed into a residential space, and the remaining office will house my property management company. Once rehabbed, the 2/1 will rent out as the others at $1250 per month. The total Value added for the property is $150k at a 7.8 cap rate.

How did you find this deal and how did you negotiate it?

Wholesaler friend working to purchase 100 doors this year.

How did you finance this deal?

Hard money, then rehabbed and refinanced.

How did you add value to the deal?

Light reno to the building. light reno to the units. increased rents

What was the outcome?

We'll be rehabbing the final unit at the end of the year. REhabbing the unit will increase the value of the property substantially by over $100k

Lessons learned? Challenges?

Use whatever means possible to use OPM in the purchase of CMF

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I used my team to find and BRRRR the property, and MIRS Lending Group, LLC for the loans.

Investment Info:

Other commercial investment investment.

Purchase price: $350,000

This is a commercial mixed-use property on NJ State Rt 130. The property was under-rented, and the owner was using the commercial space. The property was purchased using an income valuation approach, and the rents were below market. We also excluded the owner's opinion that the commercial space was valued at $600 per month. We are increasing rents as leases expire, and all tenants are on board with $150 increases. The commercial space will be rehabbed into a residential space, and the remaining office will house my property management company. Once rehabbed, the 2/1 will rent out as the others at $1250 per month. The total Value added for the property is $150k at a 7.8 cap rate.

How did you find this deal and how did you negotiate it?

Wholesaler friend working to purchase 100 doors this year.

How did you finance this deal?

Hard money, then rehabbed and refinanced.

How did you add value to the deal?

Light reno to the building. light reno to the units. increased rents

What was the outcome?

We'll be rehabbing the final unit at the end of the year. REhabbing the unit will increase the value of the property substantially by over $100k

Lessons learned? Challenges?

Use whatever means possible to use OPM in the purchase of CMF

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I used my team to find and BRRRR the property, and MIRS Lending Group, LLC for the loans.

Quote from @Kevin Luttrell:

@David Dachtera

It's a relatively new type of residential loan that non-QM lenders started offering, obviously using DSCR to qualify. One of the few ways to get a 30yr loan for a residential property with the mortgage in your LLC.

 Kevin, 

We're starting to underwrite our buys using straight DSCR. We know that at a 1.25 or better, we'll be looking good. The lenders we use are starting to buy-in. I have one that even now provides a copy of their underwriting highlighting CoC return and the DSCR.

Quote from @Kevin O'Brien:

Hey all,

got a bit of sticker shock at 6.7% 30 year fixed with 5 year pre payment penalty. Prior loan was done literally a month ago at 5.5% and 3 year pre payment. Is 6.7% really market rate now? Plenty of experience already, great credit and property cash flows fantastically. I was hoping for like 6%. 

The rates are really in flux, closed on a 30-year 3.85% in February and yes I'm looking at high 5's now as well.  Just put it into your underwriting and realize that your tenants will most likely be seeing an increase in rent next year to cover the 8-10% inflation rate. 

Quote from @Kerry Noble Jr:

We have a couple "thrift" home supply spots where you can get vanities, flooring, cabinets, etc for cheaper.....they definitely come in handy

 Absolutely! And if you buy from them, you're usually supporting a quality charity like using the ReStore from Habitat for Humanity.

The NAHB’s Eye on Housing says the prices of goods used in residential construction (excluding energy) rose 1.6% in February, according to data from the Bureau of Labor Statistics. Their data show that building materials prices increased 20.4%, year-over-year, and have risen 31.3% since January 2020.

Building materials have seen a price increase in the past year, and this is likely to continue into the near future. This is due to inflation, which has been on the rise in recent years. While this may be frustrating for homeowners and builders, it is likely to continue for the foreseeable future.

There are a few ways to combat the increasing prices of building materials. The first is to shop around for the best deals. There are many suppliers of building materials, and prices can vary greatly. It is important to compare prices before making a purchase.

The second way to combat rising prices is to use alternative materials. There are many building materials that are becoming more popular as the price of traditional materials rises. For example, bamboo is a popular alternative to wood. Bamboo is strong and durable, and it grows quickly, making it a sustainable choice.

The third way to combat rising prices is to use recycled materials. There are many building materials that can be recycled, including metal, plastic, and glass. Recycled building materials are often cheaper than traditional building materials, and they are better for the environment.

In conclusion, building materials are seeing an increase in price due to inflation. While this may be frustrating, there are ways to combat the issue. By shopping around for the best deals, using alternative materials, or using recycled materials, homeowners and builders can save money and help the environment.

Do you agree or have a different opinion? Let me know!

If you have any questions, feel free to reach out directly!

Until then ~AIM HIGH!

Bud Evans, USAF Maj (ret)

1. Do your research

Like any other investment, it's essential to do your research before buying a rental property. Ensure you know what to expect in terms of expenses, expected return on investment, and market conditions in the area.

2. Get pre-approved for a mortgage

One of the most important things you can do when buying a rental property is pre-approved for a mortgage. This will give you a good idea of how much you can afford to spend and show potential sellers that you're a serious buyer. With the BRRRR strategy, you should already have a lender in mind and probably hard money at that. Additionally, have a set exit strategy and know who will be refinancing the property.

3. Consider your long-term plans

When buying a rental property, it's essential to consider your long-term objectives for it. Will you be renting it out indefinitely, or do you plan on eventually selling it? If you plan on selling it down the road, you'll want to make sure the property is in a good location and has potential for appreciation. Make your money before you buy the property!

4. Choose the right property

When choosing a rental property, it's crucial to find one that will be appealing to tenants. Make sure it's in a good location, has adequate parking, and is in good condition.

5. Have a plan for repairs and maintenance

One of the things you need to consider when buying a rental property is how you'll handle repairs and maintenance. You'll likely need to set aside some money each month to cover these costs, so make sure you have a plan in place.

6. Screen your tenants carefully

When renting out your property, it's essential to screen your tenants carefully. Make sure you ask for references and do a credit check before renting to anyone. This will help ensure that you're getting quality tenants who will care for your property.

7. Set up an LLC

If you're buying a rental property intending to rent it out, it's a good idea to set up an LLC. This will help protect you from any legal issues that may arise with your tenants. Consult an asset protection specialist, CPA, or Attorney to be sure. However, you could also use an online service or file with the county clerk in your area.

8. Keep up with the paperwork

When renting out a property, it's essential to keep track of all the paperwork. Make sure you have a file for each tenant and keep track of all payments and repairs. Use an online source like STESSA or Apartments . com for help on tracking expenses and rental income.

When buying your first rental property, it's essential to research and plan. Getting pre-approved for a mortgage is one of the most important things you can do, and you'll also want to make sure the property you choose is in a good location and condition. Buying a rental property can be an excellent investment!

Dan,

I have to agree with Caleb on this one.  I have an FCU on several of my properties at just around 4% and had to use a broker to get my others which are also around the 4.2-4.3% range.  

Good luck.